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2006 (10) TMI 383 - HC - Income TaxTDS liability on Insurance companies - TDS u/s 194A - interest received on the compensation - Motor Accidents Claims - HELD THAT:- The income-tax liability of the concerned claimants to pay tax on the interest accrued on the compensation awarded to them shall arise if such interest income accrued in the concerned financial year together with other income of the respective claimants in that financial year exceeds the chargeable limit as specified in the provisions of the Income-tax Act, 1961 in force for the relevant years. It will, therefore, be open to the claimants to make appropriate applications/representations before the concerned income-tax authority for refund of such amount/s as may be due to them out of the amount which has already been deducted by the Insurance Company as tax deducted at source under the provisions of Section 194A of the Act. It is necessary to obviate such a situation in future for other claimants who may be awarded compensation with interest thereon, and the amount of interest being deposited exceeds Rs. 50,000/-, but who may not be liable to have any tax deducted at source as per the interpretation placed by us on the provisions of Section 194A of the Act. In the facts of the present case, since the Insurance Company had deducted tax on compensation u/s 194A(3)(ix) of the Act by treating the entire interest amount as one lumpsum amount, we direct that after giving the claimants the details of the amounts of interest spread over the relevant financial years and the break-up amongst several claimants, the Insurance Company shall, within one month from the date of receipt of a certified copy of this order, furnish to the claimants the certificate indicating the interest amounts computed for each year and with the break-up of the interest amounts payable to each claimant in each of those years as per the apportionment made in this order. Thereafter it will be open to the claimants to make applications/representations before the appropriate income-tax authority which shall decide the same within six months from the date of receipt thereof. We are not passing any orders on the prayers for disbursement of the amounts as the learned advocate for the claimants seeks leave to file a separate application with all necessary facts in support of the prayer. Leave as prayed for is granted - The application is accordingly allowed in the aforesaid terms.
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